Legislation

Congress Wants to Block Foreign Ownership of U.S. Farmland. Is This a Red Herring?

Photo of Lela Nargi

By Lela Nargi

Feb 4, 2023

Graphic by Ali Aas

The real threat to our food security, according to researchers, is broader corporate ownership and consolidation of American farmland — including by domestic investors.

There’s been a whole lot of brouhaha lately about foreign companies investing in U.S. farmland. This past October, 130 Republican House members penned a letter to the Government Accountability Office (GAO), tasking it with investigating (especially) Chinese farmland purchases and their potential impacts on our national security and food supply. (GAO’s looked into this sort of thing four times before, starting in 1978, and says it will do so again now.)

Then last week, the Foreign Adversary Risk Management (FARM) Act, introduced in October of 2021 in the House, by Rep. Ronny Jackson (R-TX), and in the Senate, by Sen. Tommy Tuberville (R-AL), sparked back to life, with more lawmakers on both sides of the aisle signing on to try to push legislation through. This seeks to amend the Defense Production Act of 1950 to “prevent harm and disruption to the United States agriculture industry by protecting against foreign influence over agriculture production and supply chains.” Newcomer to the effort Rep. Abigail Spanberger (D-VA) referred to it in press materials as vital to protecting the “American ag industry from foreign interference, including from the Chinese Communist Party.”

Then just yesterday a bipartisan bill was introduced in both the House and Senate by Rep. Elise Stefanik (R-NY), Rep. Rick Crawford (R-AR), Rep. Jim Costa (D-CA), Sen. John Tester (D-MT), and Sen. Mike Rounds (R-SD). Titled the Promoting Agriculture Safeguards and Security (PASS) Act, this legislation would prohibit China, Russia, Iran, and North Korea from purchasing U.S. agricultural land and agricultural companies, and requires a Presidential waiver for any exceptions. “Food security is national security, and I am proud to stand up against our foreign adversaries as they attempt to exploit any potential vulnerability and assert control over our agriculture industry,” said Stefanik in a statement.

Also this week, the Air Force declared a proposed corn milling plant owned by a Chinese company a “significant threat to national security” for its proximity to a North Dakota Air Force base; some of the state’s politicians have called for the building plan to be scrapped. Montana Republican State Senator Kenneth Bogner took to Twitter to tout his Bill 203, which prohibits the purchase of Montana farmland by China and other “foreign adversaries.”

Is this xenophobia at its loudest, or is there something more to see here?

Probably some of both. “I do think that there is a point to be made that if foreign entities are buying land in the U.S. there can be accountability challenges,” said Jordan Treakle, national programs and policy coordinator of the National Family Farm Coalition (NFFC) — such as when community members face challenges in holding to account, for example, manure-spewing (Chinese-owned) hog farms.

The charge is being led by Wall Street investors and other financiers “looking for a place to park their money.”

Treakle points out, though, that Canada, not China, is the largest foreign holder of American agricultural land by far (31% vs 1%). What concerns him is that “If we look at the data on who are the leading investors in farmland, those are U.S.-based individuals and corporations,” Treakle said. This includes individuals like Bill Gates, the largest private farmland landholder, and corporations like financial services company TIAA, the largest institutional farmland holder.

NFFC recently partnered with the Vermont Law School’s Center for Agriculture and Food Systems (CAFS) on four reports. These look at what the researchers call land grabs — although they also apply to things like the purchase of water rights — which they define as “often corporate-led attempts to control land, water, profits, and other resources” that are “focused on maximizing profits — not increasing agricultural production or sustainably managing natural resources.” The charge, they say, is being led by Wall Street investors, pension funds, and other financiers “looking for a place to park their money.”

The issue as it’s been raised by Congress, “ignores the real issue, which is that farmland is being purchased by these big pension funds, like TIAA and multinationals from the U.S., and that that’s what’s harmful to our agricultural system,” said Francine Miller, senior staff attorney and adjunct attorney at CAFS, who contributed to the reports. “The foreign ownership is in some ways the least of it.”

Whether investors are foreign or domestic, it’s all part of the same complex issue — namely, massive consolidation in all parts of agriculture. Treakle said adding farmland to investment portfolios increased after the 2008 financial crisis, as institutional investors “tried to forge this new asset class for agriculture as a stable investment over the long term,” hedging against the volatility of the stock market; there’s now even an investment fund started by a group of professional athletes for the sole purpose of buying — and making money off of — farmland.

Investors have a fiscal reason to want land values to remain high, which acts as a barrier to farmers staying in or entering agriculture.

On a practical level this means that investors have a fiscal reason to want land values to remain high, which acts as a barrier to farmers staying in or entering agriculture. Investors might also have zero interest in making sure the land they’ve invested in is ecologically sustainable. “That’s a food security issue,” said Miller.

Figuring out who owns farmland is not an easy task. According to the NFFC/CAFS reports, USDA hasn’t been given enough resources by Congress to regularly track or disclose farmland ownership trends. The few USDA surveys that exist ask whether the owner is a “corporation,” but researchers say there’s no way to distinguish between a giant multinational and a farm family incorporating their business as an LLC. A special review done by USDA in 2014 identified corporate ownership of 4.3% of U.S. ag lands; two others, mandated by the 2018 Farm Bill, found that number had risen to 7.9%. But, said Treakle, these were based on old data and are likely significant undercounts.

When it comes specifically to foreign ownership of U.S. farmland, federally, there’s currently no restriction. Tracking it falls under the purview of the Agricultural Foreign Investment Disclosure Act (AFIDA), in which individuals and companies are tasked with reporting land purchases. Treakle called this law “flimsy.”

Miller elaborated in an email: “The ‘foreign person’ is required to notify [a] state department of agriculture regarding the transfer or purchase of agricultural land, [but there’s] no enforcement mechanism and although it is ‘required,’ it is really voluntary.” What non-U.S. farmland ownership does turn up on the record puts it at 1% as of 2018 — again, a likely undercount, say the researchers.

“Our land governance laws are just not up-to-date with the amount of investment that is flowing into the country,” said Treakle.

“Only focusing on foreign corporations does not acknowledge the full scale of the problem.”

There are about 14 states with laws on the books to prohibit the foreign purchase of farmland. But, said Loka Ashwood, a sociologist at the University of Kentucky, “The laws are really egregious on anti-corporate farming and in fact, sometimes they’re used to make corporations further exempt from culpability.” An Iowa law states that a foreign entity can own less than 320 acres of farmland for non-farming (although they’re free to lease it out for that purpose). But Ashwood said that for a few hundred dollars, a corporation can form multiple LLCs to hold parcels of land under a stated threshold, “and nobody investigates whether they’re connected financially.” She said many state laws, like Indiana’s, also make exemptions for foreign-held animal operations. Existing state laws, Treakle said, “have been under attack in the courts, and … there is a general trend towards big business trying to roll back these pretty basic protections.”

The FARM Act touted by some members of Congress doesn’t much impress Miller. “If Congress was really concerned about foreign ownership of agricultural businesses, they would be looking at Smithfield, JBS and other multinationals in the food industry owned by foreign entities,” she wrote.

What else could be done to strengthen anti-corporate ag laws? For one, Ashwood said the Farm Bill already provides money to land trusts to conserve land for agriculture. She’d like to see more of this, as well as a push for disclosures about who the beneficiaries of landholdings are. There’s been some movement to do this under 2019’s Corporate Transparency Act. “That’s a simple solution right there, if you [implement it] all across the country,” she said. It “allows the disclosure of foreign-owned shell companies’ ultimate beneficial owners to the Financial Crimes Enforcement Network, and separately, requires federal contracts to disclose ultimate beneficial owners. We need to use this same language, but require it for land purchases and allow the public access to this information.”

On a grassroots level, Treakle sees benefit in getting USDA to support community-based land access initiatives, particularly for new, beginning, and historically underserved farmers, with grants, policy, and pilot projects. He also sees a need to continue to defend anti-corporate farming laws at the state level. And, he said, “Only focusing on foreign corporations does not acknowledge the full scale of the problem, and actually risks exacerbating consolidation trends led by domestic multinational corporations that we see in land ownership and vertical integration in areas like food processing.”

Write for Ambrook Research.

Author


Photo of Lela Nargi

Lela Nargi

Lela Nargi is a journalist covering food and ag policy, social justice, and climate-related science for outlets such as The Guardian, FERN, Eater, and Modern Farmer. Find her at lelanargi.com.


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